To Mugzilla... you can "get away with" whatever size TV you want, assuming you alter your plans to fit the thing. I would think 32" is way too big to be that close, but if you like it, it can be done. If you are converting a cab, than more than likely, no, it wont fit.... unless you have a showcase cab or some other large screen cab of course.
As for 25 or 27, a lot of people around here have used both. I think 25" is a nice size, I have a 25" arcade monitor in my Xmen and it's not overly big where I have to look right to left very often. I don't think the extra size would be tooooooo big a difference, but it is something to think about. You'll be looking left to right more on a bigger screen, so if that bothers you, or your favorite games need you to see the whole screen at once, you may want the smaller screen.